Is India less corrupt or has the nature of corruption changed?

Going by the two available international corruption rankings of countries, India has become less corrupt, at least over the recent period 2013-20. In terms of TRACE (an international business association) index, which measures ‘Bribery Risk’ as perceived by foreign investors while doing business in 194 countries, India’s rank has hugely improved from 185 in 2014 to 77 in 2020. The Transparency International (TI) Corruption Perception Index, which measures corruption as perceived by domestic businesspeople in 180 countries, placed India at 94th rank in 2013 and at 86th rank in 2020, which is also an improvement.

In terms of absolute measure of corruption, too, India has become less corrupt. For India, TRACE absolute score has vastly improved from 45 in 2014 to 80 in 2020 while TI absolute score has shown a small improvement from 36 in 2013 to 40 in 2020. (Note: here higher score implies less corruption.)

Both the above indexes gather the perceptions from MNCs and big domestic businesses. Thus, the perceptions of small and medium enterprises are not captured in these measures. Big businesses often strike deals with top-level politicians and bureaucrats. The small enterprises, on the other hand, have to deal with lower-level politicians, bureaucrats and inspectors who are more in number. Hence, for them, the scope for harassment/corruption is greater and recurring.

But what about the perception of ordinary citizens? In several respects, the situation has definitely improved over the years. For example, the days when ordinary taxpayers had to arrange a tout to bribe the tax officials to complete the income tax assessment and get refunds are gone. The same was the case for reservation of berths in trains. The use of technology, like computerisation in income tax department and rail reservations, made this possible.

But then, the nature of corruption is changing over time. In the days of licence-permit regime with shortages, rationing and price controls, the scope for corruption was enormous. People had to wait for years to get things like a HMT watch, a Bajaj Chetak scooter or a Maruti 800 car or a BSNL landline telephone or an LPG gas connection. Bribing to jump the queue was commonplace. Alongside, a thriving black market developed as people lucky to get the permits found it profitable to sell those coveted permits/goods to others willing to pay a premium price. Smuggling and black-marketing were rampant in the markets for foreign exchange and imported goods. These types of corruption have mostly vanished with the abolition of industrial licensing, entry of new players with corresponding increase in supply of goods, abundance of foreign exchange reserves, abolition of import quotas and sharp reduction in import duties.

Following the big spectrum and coal scams, the Supreme Court ruling that all sales/leases of natural resources will have to go through open competitive auctions has put an end to this type of corruption. But illegal mining and sale of natural resources (coal, sand, wood, other mineral and forest products), in collusion with political leaders and local administrations, continues unabated.

Some politicians have found new ways of illegal self-enrichment. These are popularly known as ‘Syndicate Raj’ (meaning anyone building a house is forced to buy either sub-standard building materials at more than market prices from people belonging to the ruling party) and ‘cut-money’ (meaning, the recipients of various government welfare schemes have to share a part of the benefits with local political bosses – otherwise their names will not figure in the list of beneficiaries). With the proliferation of government welfare schemes, the scope for such types of corruption has increased over time.

There are many allegations of corruption in allocation of seats in educational institutions, beds in government hospitals and appointment/posting/transfer of government teachers and officials, including even IAS and IPS cadres.

The politician-police nexus has also given rise to another kind of extortion racket. Under this ‘hafta’ system, all businesses and operators – ranging from the small street-side tea vendors, hawkers, bars, restaurants to rich business houses – have to make a monthly payment which is shared between the police and the political leaders. Otherwise, they will face harassment for violating some law/regulation. Illegal trade in banned substances like drugs, arms and gutka also flourish the same way. That it is a huge money-spinner is coming to the surface by the unfolding Vaze extortion scam in Mumbai.

The buying of MLAs and MPs (known as ‘horse-trading’) is a new type of corruption thriving in our democracy. It is not surprising that the lion’s share of the electoral contributions (in the form of Electoral Bonds) has gone to BJP because, as the ruling party at the Centre and in many states, it has the biggest power to bestow favours as well as wield the sticks.

Some important differences exist between Indian-style corruption and the corruption that prevails in the developed countries. Even in countries like the US, Japan, South Korea and Israel, corruption exists in high places and several prime ministers and presidents have been forced to resign on corruption charges. But, unlike in India, ordinary people there do not have to face corruption in everyday life. In addition, in India, sometimes there are multiple contenders (in government offices and political parties) who promise to deliver a service in exchange for bribes. One is not sure whom to bribe and whether the person taking the bribe would actually be able or willing to deliver the promised favour.

Some suggest that the punishment for corruption needs to be severe if it has to be an effective deterrent. Actually, it is not the quantum of punishment but the probability of getting caught, prosecuted and ultimately sentenced that holds the key. Here, the honesty/efficiency of regulators, police and judiciary working in a time-bound manner comes into play. These are areas where a lot is lacking in India.

(The writer is a former professor of Economics, IIM, Calcutta and Cornell University, US)